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Saturday, January 31, 2009

31 Jan 2009

France paralysed by a wave of strike action, the boulevards of Paris resembling a debris-strewn battlefield. The Hungarian currency sinks to its lowest level ever against the euro, as the unemployment figure rises. Greek farmers block the road into Bulgaria in protest at low prices for their produce. New figures from the biggest bank in the Baltic show that the three post-Soviet states there face the biggest recessions in Europe.

It's a snapshot of a single day – yesterday – in a Europe sinking into the bleakest of times. But while the outlook may be dark in the big wealthy democracies of western Europe, it is in the young, poor, vulnerable states of central and eastern Europe that the trauma of crash, slump and meltdown looks graver.

Exactly 20 years ago, in serial revolutionary rejoicing, they ditched communism to put their faith in a capitalism now in crisis and by which they feel betrayed. The result has been the biggest protests across the former communist bloc since the days of people power.

Europe's time of troubles is gathering depth and scale. Governments are trembling. Revolt is in the air.

Alexandros Grigoropoulos, a 15-year-old middle-class boy going to a party in a rough neighbourhood on a December Saturday, was the first fatality of Europe's season of strife. Shot dead by a policeman, the boy's killing lit a bonfire of unrest in the city unmatched since the 1970s.

There are many wellsprings of the serial protests rolling across Europe. In Athens, it was students and young people who suddenly mobilised to turn parts of the city into no-go areas. They were sick of the lack of jobs and prospects, the failings of the education system and seized with pessimism over their future.

This week it was the farmers' turn, rolling their tractors out to block the motorways, main road and border crossings across the Balkans to try to obtain better procurement prices for their produce.

The old Baltic trading city had seen nothing like it since the happy days of kicking out the Russians and overthrowing communism two decades ago. More than 10,000 people converged on the 13th-century cathedral to show the Latvian government what they thought of its efforts at containing the economic crisis. The peaceful protest morphed into a late-night rampage as a minority headed for the parliament, battled with riot police and trashed parts of the old city. The following day there were similar scenes in Vilnius, the Lithuanian capital next door.

After Iceland, Latvia looks like the most vulnerable country to be hammered by the financial and economic crisis. The EU and IMF have already mounted a €7.5bn (£6.6bn) rescue plan but the outlook is the worst in Europe.

The biggest bank in the Baltic, Swedbank of Sweden, yesterday predicted a slump this year in Latvia of a whopping 10%, more than double the previous projections. It added that the economy of Estonia would shrink by 7% and of Lithuania by 4.5%.

The Latvian central bank's governor went on national television this week to pronounce the economy "clinically dead. We have only three or four minutes to resuscitate it".

Burned-out cars, masked youths, smashed shop windows, and more than a million striking workers. The scenes from France are familiar, but not so familiar to President Nicolas Sarkozy, confronting the first big wave of industrial unrest of his time in the Elysée Palace.

Sarkozy has spent most of his time in office trying to fix the world's problems, with less attention devoted to the home front. From Gaza to Georgia, Russia to Washington, Sarkozy has been a man in a hurry to mediate in trouble spots and grab the credit for peacemaking.

France, meanwhile, is moving into recession and unemployment is going up. The latest jobless figures were to have been released yesterday, but were held back, apparently for fear of inflaming the protests.

A balance of payments crisis last autumn, heavy indebtedness and a disastrous budget made Hungary the first European candidate for an international rescue. The $26bn (£18bn) IMF-led bail-out shows scant sign of working. Industrial output is at its lowest for 16 years, the national currency - the forint - sank to a record low against the euro yesterday and the government also announced another round of spending cuts yesterday.

So far the streets have been relatively quiet. The Hungarian misery highlights a key difference between eastern and western Europe. While the UK, Germany, France and others plough hundreds of billions into public spending, tax cuts, bank bailouts and guarantees to industry, the east Europeans (plus Iceland and Ireland) are broke, ordering budget cuts, tax rises, and pleading for international help to shore up their economies.

The austerity and the soaring costs of repaying bank loans and mortgages taken out in hard foreign currencies (euro, yen and dollar) are fuelling the misery.

The east European upheavals of 1989 hit Ukraine late, maturing into the Orange Revolution on the streets of Kiev only five years ago. The fresh start promised by President Viktor Yushchenko has, though, dissolved into messy, corrupt, and brutal political infighting, with the economy, growing strongly a few years ago, going into freefall.

Three weeks of gas wars with Russia this month ended in defeat and will cost Ukraine dearly. The national currency, at less than half the value of six months ago, is akin to the fate of Iceland's wrecked krona. Ukrainians have been buying dollars by the billion. In November the IMF waded in with the first payments in a $16bn rescue package.

The vicious power struggles between Yushchenko and the prime minister, Yuliya Tymoshenko, are consuming the ruling elite's energy, paralysing government and leaving the economy dysfunctional. Russia is doing its best to keep things that way.

Proud of its status as one of the world's most developed, most productive and most equal societies, Iceland is in the throes of what is, by its staid standards, a revolution.

Riot police in Reykjavik, the coolest of capitals. Building bonfires in front of the world's oldest parliament. The yoghurt flying at the free market men who have run the country for decades and brought it to its knees.

An openly gay prime minister takes over today as head of a caretaker government. The neocon right has been ditched. The hard left Greens are, at least for the moment, the most popular party in the small Arctic state with a population the size of Bradford.

The IMF's bailout teams have moved in with $11bn. The national currency, the krona, appears to be finished. Iceland is a test case of how one of the most successful societies on the globe suddenly failed.


[roeoz] NATO High Commander Issues Illegitimate Order to Kill

Posted by AccGURU

NATO High Commander Issues Illegitimate Order to Kill
By Susanne Koelbl

28 Jan 2009

The approach to combatting the drug mafia in Afghanistan has spurred an open rift inside NATO. According to information obtained by SPIEGEL, top NATO commander John Craddock wants the alliance to kill opium dealers, without proof of connection to the insurgency. NATO commanders, however, do not want to follow the order.

A dispute has emerged among NATO High Command in Afghanistan regarding the conditions under which alliance troops can use deadly violence against those identified as insurgents. In a classified document, which SPIEGEL has obtained, NATO's top commander, US General John Craddock, has issued a "guidance" providing NATO troops with the authority "to attack directly drug producers and facilities throughout Afghanistan."
According to the document, deadly force is to be used even in those cases where there is no proof that suspects are actively engaged in the armed resistance against the Afghanistan government or against Western troops. It is "no longer necessary to produce intelligence or other evidence that each particular drug trafficker or narcotics facility in Afghanistan meets the criteria of being a military objective," Craddock writes.

The NATO commander has long been frustrated by the reluctance of some NATO member states -- particularly Germany -- to take aggressive action against those involved in the drug trade. Craddock rationalizes his directive by writing that the alliance "has decided that (drug traffickers and narcotics facilities) are inextricably linked to the Opposing Military Forces, and thus may be attacked." In the document, Craddock writes that the directive is the result of an October 2008 meeting of NATO defense ministers in which it was agreed that NATO soldiers in Afghanistan may attack opium traffickers.

The directive was sent on Jan. 5 to Egon Ramms, the German leader at NATO Command in Brunssum, Netherlands, which is currently in charge of the NATO ISAF mission, as well as David McKiernan, the commander of the ISAF peacekeeping force in Afghanistan. Neither want to follow it. Both consider the order to be illegitimate and believe it violates both ISAF rules of engagement and international law, the "Law of Armed Conflict."
A classified letter issued by McKiernan's Kabul office in response claims that Craddock is trying to create a "new category" in the rules of engagement for dealing with opposing forces that would "seriously undermine the commitment ISAF has made to the Afghan people and the international community ... to restrain our use of force and avoid civilian casualties to the greatest degree predictable."

A value equivalent to 50 percent of Afghanistan's gross national product is generated through the production and trade of opium and the heroin that is derived from it. Of those earnings, at least $100 million flows each year to the Taliban and its allies, which is used to purchase weapons and pay fighters. That, at least, is the estimate given by Antonio Maria Costas, head of the UN's Office on Drugs and Crime.

But the chain of people profiting from the drug trade goes a lot further -- reaching day laborers in the fields, drug laboratory workers and going all the way up to police stations, provincial governments and high-level government circles that include some with close proximity to President Hamid Karzai. If Craddock's order were to go into effect, it would lead to the addition of thousands of Afghans to the description of so-called "legitimate military targets" and could also land them on so-called targeting lists.

The Taliban are still responsible for the majority of civilian victims in Afghanistan. According to a United Nations report, more than half of the approximately 2,000 citizens killed last year died as a result of suicide attacks, car bombs and fighting with extremists. Nevertheless, relations between the Americans and the local population are extremely tense due the rising number of US-led air strikes and the dramatic increase in the number of civilian casualties.

Afghan villagers complain of the increase in the deaths of relatives who were mistakenly killed during military operations carried out by the Americans and their allies, such as the one carried out recently in Masamut, a village in the eastern Afghan province of Laghman. The US army announced that it had "eliminated" 32 Taliban insurgents. However, survivors claim that 13 civilians had been killed during the search for a Taliban commander. In the eyes of many Afghans the former liberators have long become ruthless occupiers.
German NATO General Ramms made it perfectly clear in his answer to General Craddock that he was not prepared to deviate from the current rules of engagement for attacks, which reportedly deeply angered Craddock. The US general, who is considered a loyal Bush man and fears that he could be replaced by the new US president, has already made his intention known internally that he would like to relieve any commander who doesn't want to follow his instructions to go after the drug mafia of his duties. Back in December, Central Command in Florida, which is responsible for the US Armed Forces deployment in Afghanistan, yet again watered-down provisions in the rules of engagement for the Afghanistan deployment pertaining to the protection of civilians. According to the new rules, US forces can now bomb drug labs if they have previous analysis that the operation would not kill "more than 10 civilians."


[roeoz] Global Population Speak Out

Posted by AccGURU

For what it's worth... http://gpso.wordpress.com/

[We'll continue taking pledges into February. To pledge, simply read
the GPSO Letter, then go to the contact page to email your pledge.]

Welcome to the website for the Global Population Speak Out (GPSO).
GPSO is a simple idea in response to our worldwide ecological plight.

The size and growth of the human population is a fundamental driver of
the crisis we face. If we hope to avert worldwide catastrophe, many
experts agree, we'll need a massive shift of attention and resources
toward humane measures designed to stabilize and ultimately reduce
world population to a sustainable level.

Yet there exists today a taboo of sorts against public discussion of
the population issue. Outside the scientific community, calls to
address population often meet vigorous, ill-informed criticism and
even hostility from both the left and right. [1] Understandably, few
in a position to speak out on population care to do so under such

Change does not spring from silence. Clearly we must find a way to
break down this taboo and bring population to the center of public

That's where GPSO comes in.
The GPSO idea

GPSO was born of a simple idea: What if a large number of qualified
voices worldwide, many of whom might not have emphasized the topic
previously, were to speak out on population all at once? The strength
of numbers might help weaken the taboo and bring population to a more
prominent position in the global discussion.
How it works

GPSO begins with an invitation (the GPSO letter) we're sending to a
large number of scientists and scholars, environmental, science, and
social policy writers, editors, and activists, staff members of
environmental NGOs, politicians, and a variety of prominent public
figures. As a group of concerned scientists and environmental writers
and activists, we invite them merely to pledge to speak out in some
way, during February, 2009, on the problem of the size and growth of
the human population.

But you need not be invited to pledge. We welcome unsolicited pledges.
See this page for details.

Importantly, participants can be sure they will have plenty of good
company in their efforts. Only if we get at least 50 commitments will
we ask respondents to honor their pledges. (We anticipate more.) If we
do, then GPSO happens; a minimum of 50, and perhaps many more
respected voices worldwide will speak out publicly on the population
issue during a single month.

Many of the invited participants will be speaking publicly on the
topic for the first time. Our strongest hope is to bring new voices to
the issue, to break down the barrier for others to follow. If GPSO is
highly successful, it will be a little easier after February for more
people to take up this crucial cause.
This site

Here on the website, you'll find information on the project, a copy of
the GPSO letter to potential participants, a list of the letter's
signers, a record of participants (pledgers) and their efforts to
speak out, a blog for updates, and materials helpful to participants
in formulating their messages or to others seeking basic information
on the global ecological crisis and its link to the size and growth of
the human population.

Thanks for stopping by, and please check back for updates in the near

[roeoz] US set for ‘big bang' financial clean-up

Posted by AccGURU

The Obama administration is gearing up for a "big bang"
announcement next week that will combine a bank clean-up with measures
to reduce home foreclosures and probably steps to kick-start credit

The plan will involve an overhaul of the troubled asset relief
programme - the $700bn bail-out fund - including strict curbs on
compensation at banks receiving public aid. The Tarp overhaul is
intended to restore public confidence in what is a deeply unpopular
programme and ensure that taxpayer money is not used to fund excessive
pay, bonuses and dividends to shareholders.

"There will definitely be a cap of some sort on bonuses," said a
Wall Street executive who has taken part in talks with the
authorities. "The political climate is such that there is a need to
punish Wall Street."

The announcement will follow Friday's news that the US economy
contracted at an annualised rate of 3.8 per cent in last year's final
quarter - less than analysts were expecting, but still the worst
quarter since 1982. The fall was cushioned by ballooning inventories,
which suggest the economy could shrink faster than expected in the
first quarter.

The "big bang" approach reflects the belief of Tim Geithner,
Treasury secretary, and Lawrence Summers, National Economic Council
director, that the Bush administration was wrong to dribble out policy
initiatives. Mr Geithner intends to present a "comprehensive" plan
that policymakers hope will command market confidence.

Details of the financial overhaul are being finalised and have yet
to be approved by President Barack Obama, but it may include both the
purchase of toxic assets by a "bad bank" and insurance-style
guarantees for problem assets remaining on bank balance sheets.

Anti-foreclosure efforts are likely to focus on subsidising
programmes that reduce unsustainable monthly mortgage payments, though
there may also be support for schemes that subsidise the partial
writedown of loans that exceed the value of the home. Treasury may
also unveil new efforts to revitalise dysfunctional securitisation


[roeoz] Russians to U.S.: Give us the Fed

Posted by AccGURU

DAVOS, Switzerland (Fortune) -- The Russians are upset that the
U.S. dollar is the world's principal reserve currency, and this week
in Davos they have been putting forward suggestions for how to fix the
issue. First came Prime Minister Vladimir Putin, who called in a
speech on Wednesday for efforts to "facilitate the emergence of
several reserve currencies."

On Thursday it was the turn of German Gref, a former Economics
Minister who is now CEO of Russia's largest bank, state-owned
Sberbank. His proposal during a panel discussion went even further
than Putin's: In the absence of any serious competitors to the dollar,
he advocated international control of U.S. monetary policy.

The biggest risk facing the world, he said, is that the U.S.
dollar plays a global role but is managed narrowly "in the vested
interests of only one country." In other words, he's pushing for the
U.S. Federal Reserve to be governed more like an international
institution than "merely" as the U.S. central bank.

Pressed by Fortune to explain what he means, Gref acknowledged
that he hasn't yet worked out the mechanisms for how Russia and other
countries would have a formal say in U.S. monetary policy.

But he insisted that the dollar's status as both the U.S. currency
and as a global one is "one of the three to four main reasons for this
crisis." Moreover, if the situation isn't changed, "we will stay in
the same international crisis."

I talked to several Russians and Russian watchers who are
attending the World Economic Forum, and they say that while the
Kremlin has long grumbled the dominance of the dollar, this is the
first time they've heard Russian officials putting forward specific
solutions - including having a say in U.S. monetary policy.

The Russians are chafing about the greenback because it has been
extremely volatile over the past few years - and because their oil and
gas is sold in dollars. And of course, the dollar is a potent
worldwide symbol of American economic and political power, which they
aren't all that crazy about either.

The Russian central bank has tried to mitigate the issue by
devaluing the ruble against a basket of currencies that comprises the
dollar and the euro, rather than just the dollar. When the financial
crisis exploded last fall, the ruble came under heavy selling pressure.

For several weeks, the central bank tried to prop it up, but after
blowing through about $150 billion to no avail, it has since allowed
the Russian currency to devalue gradually.

Global Recession Triggers Oil's Last Decline In Price?

Posted by AccGURU

If, and when, the world economy begins to recover, no later than 2012, the new supply will not be there to sustain it. Coupled with ongoing depletion, this lack of oil investment will lead to fresh highs for oil - as high as $300 USD per barrel. One can also imagine steeper decline rates (Bakhtiari T3?) by this stage too.

Anyone care to comment on the validity of this viewpoint? My feeling is
that anything much about $200 would see lights out for industrial civilisation,

I agree. Once upon a time, I thought the economy could handle $200
oil, but now that $147 broke the camel's back, I doubt it will ever
rise to those levels very very much.

In fact, with the economy completely screwed now, I think it would
probably go into another tailspin at $100.....

Anyone else noticed how petrol is creeping up to $1.20/L again...?
Very odd. It's on par with diesel for the first time ever.